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Full Text of SB2942  100th General Assembly

SB2942 100TH GENERAL ASSEMBLY

  
  

 


 
100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2942

 

Introduced 2/14/2018, by Sen. Chapin Rose

 

SYNOPSIS AS INTRODUCED:
 
New Act
30 ILCS 500/20-60
30 ILCS 500/40-25
30 ILCS 500/25-45 rep.

    Creates the Energy Performance Contracting Act. Requires each governmental unit to implement cost-effective conservation improvements and maintain efficient operation of its facilities in order to minimize energy consumption and related environmental impacts, and reduce operating costs. Provides that any governmental unit may enter into an energy performance contract with a qualified energy service provider to produce utility savings or operating and maintenance cost-savings. Designates the Smart Energy Design Assistance Center as the lead agency for the development and promotion of a program of performance contracts in governmental units under the Act, and provides requirements and duties for that agency. Provides for the selection process of qualified energy service providers. Provides for audits, payments, and term requirements for energy performance contracts entered into under the Act. Provides for the monitoring and reporting of energy consumption and cost-savings under an energy performance contract. Provides for the use of savings from performance contracts. Provides that the provisions of the Act shall prevail and control over conflicting provisions of law, and that any conflicting provisions of any statute enacted prior to the Act are hereby repealed. Defines terms. Amends the Illinois Procurement Code to make conforming changes. Effective immediately.


LRB100 18140 RJF 33335 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2942LRB100 18140 RJF 33335 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Energy
5Performance Contracting Act.
 
6    Section 5. Purpose. The purpose of this Act is to obtain
7long-term energy and cost-savings for all governmental units by
8facilitating prompt incorporation of energy conservation
9improvements or energy production equipment, or both, in
10connection with buildings or facilities owned, operated, or
11under the supervision and control of all governmental units, in
12cooperation with providers of such services and associated
13materials from the private sector. These arrangements will
14improve and protect the health, safety, security, and welfare
15of the people of this State by promoting energy conservation
16and independence, developing alternate sources of energy, and
17fostering business activity.
 
18    Section 10. Definitions. As used in this Act:
19    "Cost-effective" means that the present value to a
20governmental unit of the energy reasonably expected to be saved
21or produced by a facility, activity, measure, or piece of
22equipment over its useful life, including any compensation

 

 

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1received from a utility, is greater than the net present value
2of the costs of implementing, maintaining, and operating such
3facility, activity, measure, or piece of equipment over its
4useful life, when discounted at the cost of public borrowing.
5    "Cost-savings measure" means any facility improvement,
6repair or alteration, or any equipment, fixture, or furnishing
7to be added or used in any facility that is designed to reduce
8energy consumption and operating costs or increase the
9operating efficiency of facilities for their appointed
10functions that are cost effective. "Cost-savings measure"
11includes, but is not limited to, one or more of the following:
12        (1) replacement or modification of lighting
13    components, fixtures, and systems;
14        (2) renewable energy and alternate energy systems;
15        (3) cogeneration systems that produce steam or forms of
16    energy, such as heat or electricity, for use primarily
17    within a building or complex of buildings;
18        (4) devices that reduce water consumption or sewer
19    charges, including water-conserving fixtures, appliances,
20    and equipment, water-conserving landscape irrigation
21    equipment, or the substitution of non-water using
22    fixtures, appliances, and equipment;
23        (5) landscaping measures that reduce watering demands
24    and capture and hold applied water and rainfall, including
25    landscape contouring, including the use of berms, swales,
26    and terraces, the use of soil amendments that increase the

 

 

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1    water-holding capacity of the soil, including compost, and
2    rainwater harvesting equipment and equipment to make use of
3    water collected as part of a storm- water system installed
4    for water quality control;
5        (6) equipment for recycling or reuse of water
6    originating on the premises or from other sources,
7    including treated municipal effluent;
8        (7) equipment needed to capture water from
9    nonconventional, alternate sources, including air
10    conditioning condensate or graywater, for non-potable
11    uses;
12        (8) metering equipment needed to segregate water use in
13    order to identify water conservation opportunities or
14    verify water savings;
15        (9) changes in operation and maintenance practices;
16        (10) indoor air quality improvements that conform to
17    applicable building code requirements;
18        (11) daylighting systems;
19        (12) insulating the building structure or systems in
20    the building;
21        (13) storm windows or doors, caulking or weather
22    stripping, multi-glazed windows or door systems,
23    heat-absorbing or heat-reflective glazed and coated window
24    and door systems, additional glazing, reductions in glass
25    area, or other window and door system modifications that
26    reduce energy consumption;

 

 

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1        (14) automated or computerized energy control systems;
2        (15) heating, ventilation, or air conditioning system
3    modifications or replacements;
4        (16) indoor air quality improvements that conform to
5    applicable building code requirements;
6        (17) energy recovery systems;
7        (18) steam trap improvement programs that reduce
8    operating costs;
9        (19) building operation programs that reduce utility
10    and operating costs including, but not limited to,
11    computerized energy management and consumption tracking
12    programs, staff and occupant training, and other similar
13    activities;
14        (20) any life safety measures that provide long-term
15    operating cost reductions and are in compliance with State
16    and local statute;
17        (21) any life safety measures related to compliance
18    with the federal Americans with Disabilities Act that
19    provide long-term operating cost reductions and are in
20    compliance with State and local statute;
21        (22) a program to reduce energy costs through rate
22    adjustments, load shifting to reduce peak demand, and use
23    of alternative energy suppliers, such as, but not limited
24    to:
25            (A) changes to more favorable rate schedules; and
26            (B) negotiation of lower rates, same supplier or

 

 

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1        new suppliers, where applicable; and
2            (C) auditing of energy service billing and meters;
3        (23) services to reduce utility costs by identifying
4    utility errors and optimizing existing rate schedules
5    under which service is provided; and
6        (24) any other installation, modification of
7    installation, or remodeling of building infrastructure
8    improvements that produce utility or operational cost
9    savings for their appointed functions in compliance with
10    applicable State and local building codes.
11    "Energy performance contract" or "energy services
12agreement" means a contract between the governmental unit and a
13qualified energy service provider for evaluation,
14recommendation, and implementation of one or more cost-savings
15measures. A performance contract may be structured as either:
16        (1) a guaranteed energy savings performance contract,
17    which shall include, at a minimum, the design and
18    installation of equipment, and, if applicable, operation
19    and maintenance of any of the measures implemented, and
20    guaranteed annual savings which must meet or exceed the
21    total annual contract payments made by the governmental
22    unit for that contract, including financing charges to be
23    incurred by the governmental unit over the life of the
24    contract; or
25        (2) a shared savings contract, which shall include
26    provisions mutually agreed upon by the governmental unit

 

 

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1    and the qualified provider or qualified energy service
2    company as to the negotiated rate of payments based upon
3    energy and operational cost-savings and a stipulated
4    maximum energy consumption level over the life of the
5    contract.
6    "Governmental unit" means any State agency, authority, or
7any political subdivision of State or local government,
8including, but not limited to, county, city, township, village
9or municipal government, local school districts and
10institutions of higher education, any State-supported
11institution, or a joint action agency composed of political
12subdivisions.
13    "Investment grade audit" means a study by the qualified
14energy services provider selected for a particular energy
15performance contract project which includes detailed
16descriptions of the improvements recommended for the project,
17the estimated costs of the improvements, and the utility and
18operations and maintenance cost-savings projected to result
19from the recommended improvements.
20    "Operation and maintenance cost-savings" means a
21measurable decrease in operation and maintenance costs, and
22future replacement expenditures, that are a direct result of
23the implementation of one or more utility cost-savings
24measures. These savings shall be calculated in comparison with
25an established baseline of operation and maintenance costs.
26    "Person" means any corporate or non-corporate entity or

 

 

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1individual of any type.
2    "Public building" means any structure, building, or
3facility, including its equipment, furnishings, or appliances
4that is owned or operated by a governmental unit.
5    "Qualified energy service provider" means a person with a
6record of successful energy performance contract projects or a
7person who: (1) is experienced in the design, implementation,
8and installation of energy efficiency and facility improvement
9measures; (2) has the technical capabilities to ensure such
10measures generate energy and operational cost-savings; and (3)
11has the ability to secure the financing necessary to support
12energy savings guarantees.
13    "Utility cost-savings" means any utility expenses that are
14eliminated or avoided on a long-term basis as a result of
15equipment installed or modified, or services performed by a
16qualified energy service provider. "Utility cost-savings" does
17not include merely shifting personnel costs or similar
18short-term cost-savings.
 
19    Section 15. Authorization.
20    (a) Each governmental unit shall implement cost-effective
21conservation improvements and maintain efficient operation of
22its facilities in order to minimize energy consumption and
23related environmental impacts, and reduce operating costs.
24Each governmental unit shall undertake an energy audit and
25implement cost-effective conservation measures. Energy

 

 

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1performance contracting shall be the preferred method for
2completing energy audits and implementing cost-effective
3conservation measures.
4    (b) Any governmental unit may enter into an energy
5performance contract with a qualified energy service provider
6to produce utility savings or operating and maintenance cost
7savings. Cost-savings measures implemented under such
8contracts shall comply with State or local building codes. Any
9governmental unit may implement other capital improvements in
10conjunction with a performance contract so long as the measures
11that are being implemented to achieve energy and operations and
12maintenance cost-savings are a significant portion of an
13overall project. A governmental unit may enter into an energy
14savings performance contract for a period of more than one year
15only if the governmental unit finds that the amount the
16governmental unit would spend on the energy or water
17conservation measures will not exceed the amount to be saved in
18energy, water, wastewater, and operating costs over 20 years
19from the date of installation.
 
20    Section 20. Smart Energy Design Assistance Center (SEDAC).
21    (a) The Smart Energy Design Assistance Center (SEDAC) based
22at the University of Illinois at Urbana-Champaign is hereby
23designated to be the lead agency for the development and
24promotion of a program of performance contracts in governmental
25units. SEDAC will coordinate its activities with the Department

 

 

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1of Central Management Services. SEDAC, under the direction of
2the Governor, will have the following duties with respect to
3this program:
4        (1) assistance to the Department of Central Management
5    Services to assemble a list of qualified energy service
6    providers and to negotiate with such qualified energy
7    service providers master service contracts and pricing
8    schedules;
9        (2) development of a standardized energy performance
10    contract process and standard energy performance contract
11    documents, including request for qualifications, request
12    for proposals, investment grade audit contract, energy
13    services agreement, including the form of the project
14    savings guarantee, and project financing agreement; and
15        (3) promotion of the energy performance contract
16    program to all governmental units.
17    (b) SEDAC shall establish guidelines and an approval
18process for awarding energy performance contracts. The
19guidelines adopted under this subsection (b) must require that
20the cost-savings projected by a qualified provider be reviewed
21by a licensed professional engineer who has a minimum of 3
22years of experience in energy calculation and review, is not an
23officer or employee of a qualified provider for the contract
24under review, and is not otherwise associated with the
25contract. In conducting the review, the engineer shall focus
26primarily on the proposed improvements from an engineering

 

 

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1perspective, the methodology and calculations related to cost
2savings, increases in revenue, and, if applicable, efficiency
3or accuracy of metering equipment. An engineer who reviews a
4contract shall maintain the confidentiality of any proprietary
5information the engineer acquires while reviewing the
6contract.
7    (c) SEDAC shall assist governmental units in identifying,
8evaluating, and implementing cost-effective conservation
9projects at their facilities. The assistance shall include: (1)
10notifying governmental units of their responsibilities under
11this Act; (2) apprising governmental units of opportunities to
12develop and finance energy performance contracting projects;
13(3) providing technical and analytical support, including
14procurement energy performance contracting services; (4)
15reviewing verification procedures for energy savings; and (5)
16assisting in the structuring and arranging of financing for
17energy performance contracting projects.
18    (d) SEDAC is authorized to fix, charge, and collect
19reasonable fees, not to exceed 2% of the total cost of the
20energy performance contract project, for any administrative
21support and resources or other services provided by SEDAC, or
22its designee, under this subsection (d) from the governmental
23units that use its technical support services. Governmental
24units are authorized to add the costs of these fees to the
25total cost of the energy performance contract.
26    (e) The Governor is encouraged to develop and submit to the

 

 

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1General Assembly a regular or supplemental budget request for
2the additional funds and staffing required by the Smart Energy
3Design Assistance Center to fulfill the duties required under
4this Section.
 
5    Section 25. Selection of a qualified energy service
6provider. The State process of implementing energy performance
7contracts for governmental units shall be as provided in this
8Section.
9    (a) Regarding requests for qualifications, the Department
10Central Management Services is authorized to assemble a list of
11qualified energy service providers, in accordance with the
12provisions of the Illinois Procurement Code. The Department of
13Central Management Services shall attempt to use objective
14criteria in the selection process. The criteria for evaluation
15shall include substantive factors to assess the capability of
16the qualified energy service company or qualified provider in
17the areas of design, engineering, installation, maintenance,
18and repairs associated with performance contracts. The
19substantive factors shall be as follows: (1) experience in
20conversions to a different energy or fuel source, so long as it
21is associated with a comprehensive energy efficiency retrofit;
22(2) post-installation project monitoring, data collection, and
23reporting of savings; (3) overall project experience and
24qualifications; (4) management capability; (5) ability to
25access long-term financing; (6) experience with projects of

 

 

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1similar size and scope; and (7) other factors determined by the
2governmental unit to be relevant and appropriate and relate to
3the ability to perform the project.
4    (b) Regarding requests for proposals, before entering into
5a performance contract under this Section, a governmental unit
6shall issue a request for proposals from up to 3 qualified
7energy service providers. A governmental unit may thereafter
8award the performance contract to the qualified energy service
9company or qualified provider that best meets the needs of the
10governmental unit, which need not be the lowest cost provided.
11A cost-effective feasibility analysis shall be prepared in
12response to the request for proposals. The feasibility analysis
13included in the response to the request for proposals shall
14serve as the selection document for purposes of selecting a
15qualified energy service provider to engage in final contract
16negotiations. Factors to be included in selecting among the
17selected energy service providers include contract terms,
18comprehensiveness of the proposal, comprehensiveness of
19cost-savings measures, experience, quality of technical
20approach, and overall benefits to the governmental unit.
 
21    Section 30. Investment grade audit and contract execution.
22    (a) One qualified energy service provider selected as a
23result of the process provided under subsection (b) of Section
2425 shall prepare an investment grade energy audit, which, upon
25acceptance, shall be part of the final energy performance

 

 

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1contract or energy services agreement which shall be executed
2with the governmental unit. The investment grade energy audit
3shall include estimates of the amounts by which utility
4cost-savings and operation and maintenance cost-savings would
5increase and estimates of all costs of such utility
6cost-savings measures or energy-savings measures, including,
7but not limited to, itemized costs of design, engineering,
8equipment, materials, installation, maintenance, repairs, and
9debt service.
10    (b) Notwithstanding the provisions of subsection (a), if
11after preparation of the investment grade energy audit the
12governmental unit decides not to execute an energy services
13agreement, and the costs and benefits described in the energy
14audit are not materially different from those described in the
15feasibility study submitted in response to the request for
16proposals, then the costs incurred in preparing the investment
17grade energy audit shall be paid to the qualified energy
18service provider by the governmental unit. Otherwise, the costs
19of the investment grade energy audit shall be deemed part of
20the costs of the energy performance contract or energy services
21agreement.
 
22    Section 35. Installment payment and lease-purchase
23agreements.
24    (a) A governmental unit may use designated funds, bonds, or
25master lease for any energy performance contract, including

 

 

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1purchases using installment payment contracts or
2lease-purchase agreements, so long as that use is consistent
3with the purpose of the appropriation.
4    (b) A guaranteed energy performance savings contract may
5provide for financing, including tax-exempt financing, by a
6third party. The contract for third party financing may be
7separate from the energy performance contract. A separate
8contract for third party financing must include a provision
9that the third party financier must not be granted rights or
10privileges that exceed the rights and privileges available to
11the guaranteed energy performance savings contractor.
 
12    Section 40. Payment schedule and savings. Each performance
13contract shall provide that all payments between parties,
14except obligations on termination of the contract before its
15expiration, shall be made over time, and the objective of each
16energy performance contract is implementation of cost-savings
17measures and energy and operational cost-savings.
 
18    Section 45. Term of Contracts. An energy performance
19contract, and payments provided thereunder, may extend beyond
20the fiscal year in which the energy performance contract became
21effective, subject to appropriation of moneys, if required by
22law, for costs incurred in future fiscal years. The energy
23performance contract may extend for a term not to exceed 25
24years. The allowable length of the contract may also reflect

 

 

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1the useful life of the cost-savings measures. Energy
2performance contracts may provide for payments over a period of
3time not to exceed deadlines specified in the energy
4performance contract from the date of the final installation of
5the cost-saving measures.
 
6    Section 50. Allocation of obligations. Subject to
7appropriations as provided in Sections 30 and 35 of this Act,
8each governmental unit shall allocate sufficient moneys for
9each fiscal year to make payment of any amounts payable by the
10governmental unit under performance contracts during that
11fiscal year.
 
12    Section 55. Use of moneys; reconciliation.
13    (a) The governmental unit engaging in the performance
14contract shall retain the savings achieved by entering into the
15performance contract. In no event shall the governmental unit
16utilize those savings to supplant otherwise appropriated funds
17for the governmental unit.
18    (b) Unless otherwise provided by law or ordinance, a
19governmental unit may use funds designated for operating and
20capital expenditures or utilities for any performance
21contract, including, without limitation, contracts entered
22into under Section 25 of this Act.
23    (c) The energy performance contract may provide that
24reconciliation of the amounts owed under an energy performance

 

 

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1contract shall occur in a period beyond one year with final
2reconciliation occurring within the term of the performance
3contract.
4    (d) The energy performance contract shall require the
5qualified provider to provide to the governmental unit an
6annual reconciliation of the guaranteed energy cost-savings.
7If the reconciliation reveals a shortfall in annual energy cost
8savings, the qualified provider is liable for that shortfall.
9If the reconciliation reveals an excess in annual energy cost
10savings, the excess savings may be used to cover potential
11energy cost-savings shortages in subsequent contract years.
 
12    Section 60. Monitoring; reports.
13    (a) During the term of each energy performance contract,
14the qualified energy service company or qualified provider
15shall monitor the reductions in energy consumption and
16cost-savings attributable to the cost-savings measures
17installed under the performance contract, and shall, no less
18than annually, prepare and provide a report to the governmental
19unit documenting the performance of the cost-savings measures
20to the governmental unit.
21    (b) The qualified provider or qualified energy service
22company and governmental unit may agree to make modifications
23in calculating savings based on any of the following
24occurrences:
25        (1) subsequent material change to the baseline energy

 

 

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1    consumption identified at the beginning of the performance
2    contract;
3        (2) changes in utility rates;
4        (3) changes in the number of days in the utility
5    billing cycle;
6        (4) changes in the total square footage of the
7    building;
8        (5) changes in the operational schedule of the
9    facility;
10        (6) changes in facility temperature;
11        (7) material change in the weather;
12        (8) material changes in the amount of equipment or
13    lighting used at the facility; or
14        (9) any other change which reasonably would be expected
15    to modify energy use or energy costs.
16    (c) For all projects carried out under this Act, the
17governmental unit shall report the name of the project, the
18project host, the investment on the project, and the expected
19energy savings to the Illinois Commerce Commission, and shall
20file with the Illinois Commerce Commission a copy of all
21reconciliation reports delivered under this subsection (c).
22The Illinois Commerce Commission may report energy savings from
23these projects to the federal Energy Information
24Administration under the Energy Policy Act of 1992 reporting
25standards.
 

 

 

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1    Section 65. Contingency provisions. Performance contracts
2shall include contingency provisions in the event that actual
3savings do not meet predicted savings
 
4    Section 70. Use of savings from performance contracts.
5Governmental units may direct savings realized under the
6performance contract to contract payment and other expenses as
7they deem necessary. Governmental units are encouraged to
8reinvest savings whenever practical into cost-savings
9measures, so long as the governmental unit is satisfying all
10obligations under the performance contract.
 
11    Section 75. Act takes precedence; repeal of prior
12conflicting statutes. In case of any conflict between the
13provisions of this Act and any other law, the provisions of
14this Act shall prevail and control. The provisions of any
15statute enacted prior to this Act which are inconsistent with
16this Act are hereby repealed. The Attorney General shall
17consult with the Smart Energy Design Assistance Center (SEDAC)
18in construing this Section.
 
19    Section 100. The Illinois Procurement Code is amended by
20changing Sections 20-60 and 40-25 as follows:
 
21    (30 ILCS 500/20-60)
22    Sec. 20-60. Duration of contracts.

 

 

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1    (a) Maximum duration. A contract may be entered into for
2any period of time deemed to be in the best interests of the
3State but not exceeding 10 years inclusive, beginning January
41, 2010, of proposed contract renewals. The length of a lease
5for real property or capital improvements shall be in
6accordance with the provisions of Section 40-25. The length of
7energy conservation program contracts or energy savings
8contracts or leases shall be in accordance with the provisions
9of Section 45 of the Energy Performance Contracting Act 25-45.
10A contract for bond or mortgage insurance awarded by the
11Illinois Housing Development Authority, however, may be
12entered into for any period of time less than or equal to the
13maximum period of time that the subject bond or mortgage may
14remain outstanding.
15    (b) Subject to appropriation. All contracts made or entered
16into shall recite that they are subject to termination and
17cancellation in any year for which the General Assembly fails
18to make an appropriation to make payments under the terms of
19the contract.
20    (c) The chief procurement officer shall file a proposed
21extension or renewal of a contract with the Procurement Policy
22Board prior to entering into any extension or renewal if the
23cost associated with the extension or renewal exceeds $249,999.
24The Procurement Policy Board may object to the proposed
25extension or renewal within 30 calendar days and require a
26hearing before the Board prior to entering into the extension

 

 

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1or renewal. If the Procurement Policy Board does not object
2within 30 calendar days or takes affirmative action to
3recommend the extension or renewal, the chief procurement
4officer may enter into the extension or renewal of a contract.
5This subsection does not apply to any emergency procurement,
6any procurement under Article 40, or any procurement exempted
7by Section 1-10(b) of this Code. If any State agency contract
8is paid for in whole or in part with federal-aid funds, grants,
9or loans and the provisions of this subsection would result in
10the loss of those federal-aid funds, grants, or loans, then the
11contract is exempt from the provisions of this subsection in
12order to remain eligible for those federal-aid funds, grants,
13or loans, and the State agency shall file notice of this
14exemption with the Procurement Policy Board prior to entering
15into the proposed extension or renewal. Nothing in this
16subsection permits a chief procurement officer to enter into an
17extension or renewal in violation of subsection (a). By August
181 each year, the Procurement Policy Board shall file a report
19with the General Assembly identifying for the previous fiscal
20year (i) the proposed extensions or renewals that were filed
21with the Board and whether the Board objected and (ii) the
22contracts exempt from this subsection.
23(Source: P.A. 100-23, eff. 7-6-17.)
 
24    (30 ILCS 500/40-25)
25    Sec. 40-25. Length of leases.

 

 

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1    (a) Maximum term. Leases shall be for a term not to exceed
210 years inclusive, beginning January, 1, 2010, of proposed
3contract renewals and shall include a termination option in
4favor of the State after 5 years. The length of energy
5conservation program contracts or energy savings contracts or
6leases shall be in accordance with the provisions of Section 45
7of the Energy Performance Contracting Act 25-45.
8    (b) Renewal. Leases may include a renewal option. An option
9to renew may be exercised only when a State purchasing officer
10determines in writing that renewal is in the best interest of
11the State and notice of the exercise of the option is published
12in the appropriate volume of the Procurement Bulletin at least
1360 calendar days prior to the exercise of the option.
14    (c) Subject to appropriation. All leases shall recite that
15they are subject to termination and cancellation in any year
16for which the General Assembly fails to make an appropriation
17to make payments under the terms of the lease.
18    (d) Holdover. Beginning January 1, 2010, no lease may
19continue on a month-to-month or other holdover basis for a
20total of more than 6 months. Beginning July 1, 2010, the
21Comptroller shall withhold payment of leases beyond this
22holdover period.
23(Source: P.A. 100-23, eff. 7-6-17.)
 
24    (30 ILCS 500/25-45 rep.)
25    Section 105. The Illinois Procurement Code is amended by

 

 

SB2942- 22 -LRB100 18140 RJF 33335 b

1repealing Section 25-45.
 
2    Section 999. Effective date. This Act takes effect upon
3becoming law.